Bankruptcy proceedings are instigated either by the individual themselves or by a creditor who has not been paid an outstanding debt and who petitions the court for a bankruptcy order. Once a Bankruptcy order is made, the Official Receiver will immediately be appointed as the Trustee of the Bankruptcy estate.
The role of the Official Receiver/Trustee is to realise the assets owned by the debtor, investigate other potential assets and seek out and agree claims for creditors. Once those tasks are completed, it is then their duty to make a distribution to the creditors.
It is possible that an alternative trustee will be appointed by the meeting of creditors summoned by the Official Receiver or creditor owed 51% of the total debt can seek a secretary of state appointment.
Whether it is the Official Receiver or another Trustee that deals with the estate, they are required to deal with the realisation of assets in a manner set down by the relevant sections, rules and regulations of the Insolvency Act and the Insolvency rules.
This is not a particularly flexible process and it should be understood that upon the making of a Bankruptcy Order, legal ownership title to the individual’s assets transfers formally and legally to the trustee and hence the individual will not be in a position to either sell assets or manipulate them in any way following a Bankruptcy Order without the authority of the Trustee of the Bankruptcy estate.
Bankruptcy is a regulated and not particularly flexible process as opposed to an Individual Voluntary Arrangement (IVA), which provides a degree of flexibility with its terms and the durations involved. It should also be noted that there is a requirement for a public advert of the Bankruptcy proceedings, which is not a requirement where an Individual Voluntary Arrangement is concerned.